What is the maximum length of a non-compete covenant required by Endless Summer Sweets after termination or non-renewal?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
the termination or expiration of this Agreement indefinitely.
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties or "Restricted Party") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason or, where applicable, for two years after a Transfer, no Restricted Party shall directly or indirectly operate, have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor which is located at the premises upon which the Endless Summer Sweets is or was located or is located or within a twenty-five (25) mile radius of the Franchisee's location or any other Endless Summer Sweets location, whether owned by Franchisor or another Franchisee. Franchisee expressly agrees that the two-year period and the twentyfive (25) mile radius are the reasonable and necessary time and distance needed to protect Franchisor if this Agreement expires or is terminated for any reason.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to the 2024 Endless Summer Sweets FDD, franchisees and certain related parties are subject to a non-compete agreement for up to two years after the franchise agreement expires or is terminated. This restriction applies to operating, having ownership in, lending to, providing services to, or being employed by a competitor.
The non-compete extends to the physical location of the former Endless Summer Sweets and within a 25-mile radius of the franchisee's location or any other Endless Summer Sweets location. If the franchise agreement is terminated before a territory is formally determined, the non-compete area will default to the Development Area and the territory of any other Endless Summer Sweets business operating at the time of termination.
The FDD also states that if a franchisee violates the non-compete agreement, the restriction period will be extended by one day for each day of noncompliance. This means that any breach of the agreement effectively prolongs the period during which the franchisee is restricted from competing with Endless Summer Sweets. Additionally, the guarantor of the franchise agreement is also subject to a similar non-compete agreement with the same terms and conditions.